KUALA LUMPUR, 19 July 2026 (The Capital Post) – Malaysia’s economy is expected to moderate in the second half of 2026 following a strong start to the year, although resilient semiconductor exports, sustained data centre investments and stable interest rates are set to support continued growth, according to ICAEW Malaysia.
During an economic outlook webinar, Hong Leong Investment Bank (HLIB) Chief Economist Felicia Ling said the bank has raised Malaysia’s 2026 gross domestic product (GDP) growth forecast to 4.7 per cent from 4.5 per cent, supported by stronger-than-expected performance in the electrical and electronics (E&E) sector.
She said manufacturing, services and construction remain the key drivers of growth, with semiconductor exports continuing to benefit from strong global demand for artificial intelligence (AI) infrastructure and advanced computing technologies.
The analysis noted that Malaysia’s manufacturing sector is expected to remain resilient as E&E exports continue to track the global semiconductor cycle, while the services sector is supported by steady consumer spending, tourism and rising household incomes.
The webinar also highlighted the growing importance of data centre investments, with approved investments reaching RM431.1 billion in 2025. However, easing capital imports suggest investment activity could moderate in the coming quarters.
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KPJ Healthcare Berhad Chief Financial Officer and ICAEW Fellow Mohd Khairul Izzad Mohammed Shamsudin said businesses across all sectors should focus on disciplined capital allocation and long-term resilience as structural shifts reshape the investment landscape.
On the fiscal front, the outlook projects Malaysia’s fiscal deficit at 3.6 per cent of GDP, slightly above the original 3.5 per cent target, while the allocation for petrol and diesel subsidies has been revised upwards from RM15 billion to RM40 billion.
Bank Negara Malaysia is expected to maintain the Overnight Policy Rate at 2.75 per cent throughout 2026, with inflation projected to remain within the central bank’s target range despite higher global commodity prices.
ICAEW said the organisation will continue supporting finance professionals with market insights and economic analysis to help businesses navigate evolving global and domestic conditions. – The Capital Post.
